The Big Danger: Overreliance on Stocks

Quant pioneer Clifford Asness thinks bonds are expensive but don't constitute a bubble, and stocks are a little pricey, too. So what's the best course?

Armed with an M.B.A. and a doctorate in finance from the University of Chicago, Clifford S. Asness can talk about the arcane workings of the markets with the best of them. One of his key points, however, is very simple: Many investors place too big a bet on stocks and lack sufficient diversification in their portfolios. Asness, who co-founded AQR Capital Management (the name stands for applied quantitative research) in 1998 after working at Goldman Sachs in quantitative research, is a big believer in variations of four of his firm's key strategies: value, momentum, defensive, and "carry" (which includes...